“The Sicker Our People Are, The More it Costs to Care For Us, & The Higher Premiums Become”

Faced with skyrocketing health insurance costs in a ‘Not So Well’ Bermuda, Health Minister told her parliamentary colleagues that “increasing premiums is not something any Government takes lightly”.

But she said “significant increases” in the use of health care services over the years, also means: “The sicker our people are, the more it costs to care for us, and the higher premiums become.

“It is a simple and preventable cycle that we have to get out of,” said Ms Wilson.

In an overview of the new Health Insurance Amendment (No 2) Act 2018, the MInister said the Bill, “updates the Standard Premium Rate, inclusive of the Mutual Reinsurance Fund”; and makes “benefit adjustments to HIP and FutureCare”.

“After careful consideration of the volume of services used in the past year, and historically, as well as projections for future use of SHB and MRF benefits”, she said: “The actuarially derived premium for 2018/19 is $355.31 per month”, representing an increase of $21.31 (6.4%) from the current SPR of $334 per month”.

To “contain premium increases”, she said: “BHB fees are not being raised this year.”

“The Standard Premium Rate, or SPR, is the premium for Bermuda’s basic, mandated package of insurance, the Standard Health Benefit, or SHB,” said Ms Wilson.

She noted that the “SHB is the basic insurance package that all employers must provide to their employees and employees’ non-employed spouses, and pay 50 percent of its premium”.

“By law, all health insurers must include this package in any insurance policy. The package is regulated, as are its fees and premium. In addition, Government subsidizes the cost towards SHB coverage for children, indigent persons, and seniors.

“The premium for this mandated package is called the Standard Premium Rate (SPR). It is comprised of an SHB component and a Mutual Reinsurance Fund (MRF) component.

“The SHB covers most local hospital-based care (inpatient and outpatient services), select diagnostic imaging in and out of hospital (eg mammograms), and select medical home care benefits (eg IV infusions).”

The Minister’s overview continued: “The MRF is a prescribed amount which each insurer pays into a pooled fund to cover all insured persons’ kidney care, including transplants; and transfers to specific health programmes.”

She also plans to update MPs later this year “for a revamped set of BHB fees based on relative values, and derived with the principle of revenue neutrality; meaning BHB will not generate additional revenue from the change”.

The Bill will also bring “adjustments to the Mutual Reinsurance Fund (MRF) and its coverage for kidney care”.

“Specifically, coverage for a kidney transplant is increased from $100 thousand to $150 thousand in order to enable more transplants,” said the Minister.

“Historically there has been a lack of clarity as to whether MRF dialysis claims were covered under subsidy or not.

“The Bill clarifies its treatment making dialysis subject to the same rules as standard health benefits with respect to subsidy coverage,” she added.

“To protect the fund and prevent inadvertent cost increases due to shifts in practice, dialysis coverage is capped at an amount equal to 13 sessions a month unless more is medically recommended, per existing standards.

“Furthermore, clarification is made that the MRF is only responsible for the cost of locally-insured persons.

“In addition to utilization increases, the major part of the increase in the SPR is due to adjustments in the transfers to the Health Insurance Fund to support the low-cost insurance programmes, HIP and FutureCare, and prevent their premiums from increasing.

“These health insurance options are the lowest cost in the market and they are subsidized by both a dedicated cash injection from the Consolidated Fund and transfers from the MRF. These mechanisms keep the fund solvent and able to pay the claims of its policy holders, including the Financial Assistance client group.”

She also noted that clients on Financial Assistance – “a population with a heavier burden of disease and disability” encounter circumstances “resulting in much greater need for care and, consequently, much higher costs”.

“Policy holders in this group generally cost about four times the premium collected. That is, for every dollar collected, the fund spends four dollars. This is a staggering, unsustainable disparity and an example of why financing reform is so desperately needed in our health system,” the Minister added.

More information on the reforms being worked on by the Ministry will be announced “in the coming months”. But for now, she said: “We have to accept that in order to pay for the care our people need, the premiums have to increase as recommended by our actuaries.

In addition to setting the standard premium rate and associated premiums, the new Bill brings benefit revisions to HIP and FutureCare, which have no impact on premium but enable operational efficiencies, regularize actual practices and provide clarity for policy holders.

Specifically:

The FutureCare pharmacy benefit is amended to provide 100% coverage for brand or generic drugs. Although the Ministry supports wholeheartedly the use of generics, this change eliminates co-pays for brand drugs which are sometimes less costly, and administratively it is more efficient and cheaper to bypass adjudication based on type. The pharmacy benefit remains $2,000 year and we continue to encourage physicians, pharmacists and policy holders to stretch their coverage by using the lowest-cost options.

Other updates to the HIP and FutureCare benefits, Mr Speaker, are as follows:

The Wellness Benefit is made more flexible by removing the co-pay while keeping the annual cap of $210.

The Personal Home Care Benefit is made claimable on a pro-rated monthly basis, making easier for providers to claim.

The requirement for a physician referral for Speech Therapy is removed as it does not necessary.

The FutureCare Dental benefits are clarified and aligned with HIP benefits; and lastly,

The FutureCare kidney transplant benefit wording is amended to clarify that the coverage is towards the cost of a transplant. This enables coverage of transport and assessment consultations to remove barriers to kidney transplantation.

That is the extent of the amendments proposed in this Bill. To effect these changes, the Bill amends:

Section 2(1) is amended to transfer cover for dialysis treatment from the Mutual Re- insurance Fund in respect of those persons who are already covered for the standard health benefit under that section.

Subsection (2E) of section 3A is amended:

(a) to clarify that the Mutual Re-insurance Fund covers dialysis treatment only for persons insured under the Act,

(b) to link it to the amendment to section 2(1) by providing that claims for dialysis treatment cover are subject to the newly added subsections (2F) and (2G) (see below), and

(c) to increase from $100,000 to $150,000 the amount paid out of the Mutual Re-insurance Fund in respect of an insured person towards the cost of a kidney transplant and maintenance drugs.

Subsections (2F) and (2G) are added to section 3A.

Subsection (2F) provides that claims for dialysis treatment are not covered under subsection (2E)(a) where, and to the extent that, such claims are covered under section 2(1).

Subsection (2G) provides that a person’s cover, under subsection (2E)(a) and section 2(1), shall be limited to an amount not exceeding $12,532 per month for haemodialysis treatment unless additional sessions are determined by the Committee to be medically necessary.